Joe Biden’s environmental policy has been stellar by any modern standard, and history will likely appraise his administration as the one that did more to reduce our dependency on fossil fuels than any other.
The Inflation Reduction Act alone advanced a broad slate of new standards that cut pollution from power plants, vehicles,oil wells, and more, while providing incentives and tax credits for renewables. Last month, his EPA sounded the death knell to coal plants by requiring a 90% reduction in pollutants in the next 15 years, part of Biden’s commitment to cut greenhouse gas emissions in half by 2030.
But the president should keep one promise he has made since the 2020 campaign, which is to pressure Congress to end all public subsidies for fossil fuel companies, because no rationale exists for an industry to receive massive federal dollars and tax breaks when it is feasting on record profits while playing the leading role in converting our planet into a cosmic hothouse.
Biden is direct: There is no need or justification to extend taxpayer support, so the budget request he made to Congress in March was his fourth attempt to eliminate what he called “wasteful subsidies” to an industry that posted obscene profits while it gouges the public.
The federal government has allowed companies that extract oil products to deduct related costs – such as construction, drilling, and other expenses – since 1916, when oil was a new industry that needed a boost. Big Oil has benefitted from hundreds of billions of dollars in federal subsidies that remain entrenched in our tax code to this day.
By some estimates, taxpayers pay about $20 billion each year to subsidize the industry in various ways, and if you think the American consumer gets something in return, think again: Conservative energy economist Gilbert Metcalf of Tufts University, while admitting tax breaks modestly increase oil production, affirms that these subsidies offer “little if any benefit in the form of oil patch jobs, lower prices at the pump, or increased energy security for the country.”
In fact, when the five biggest oil companies earned a record $200 billion in profits in 2021 – double their combined profit from the previous year – there was some hope that they would use those profits to invest in clean alternatives. Instead, BP, Shell, and Exxon used them for stock buybacks, larger dividends to wealthy shareholders, and massive bonuses for executives.
So Biden hit back last month by jacking up fees for fossil fuel companies that drill and mine on public lands, which hadn’t happened in a century. That is a big step, but now it’s time to eliminate subsidies across the board: In a world where climate change threatens every sector of our economy – healthcare, housing, transit, insurance, and more – we need to send a message to oil company CEOs and the carbon caucus in Congress that the rest of us are taking the transition to renewables more seriously.
Because right now, as Senate Budget Committee chairman Sheldon Whitehouse (D-R.I.) put it, “We are subsidizing the danger.”
Indeed, oil and gas production are at record levels during the Biden Administration, with the U.S. pumping 13 million barrels per day on average in 2023. But progress is always incremental, and in 2024 -- for the first time in our history \-- we will generate more electricity from wind and solar than from coal-fired power plants.
Clearly, the transition is slow but irreversible, but Biden can help expedite the process by reminding the carbon capitalists of their first economic commandment: that markets – not governments – pick the winners.
No 21st century taxpayer believes that we still need to help Big Oil extract its fossil fuels. Once clean-energy infrastructure is built, the market undoubtedly can get used to the idea that wind and sunshine are free.
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